An appeals court in Missouri has slapped down a lawsuit brought by the Missouri Auto Dealers Association in 2015. MADA wanted the court to order the Missouri Department of Revenue not to allow Tesla to sell its automobiles directly to consumers in the Show Me State.
The case was heard in 2016 by Cole County circuit court judge Daniel Green, who ruled that Tesla is not a franchisee as defined by Missouri law. He ordered the Department of Revenue not to renew Tesla’s licenses to sell cars in Missouri.
Tesla immediately shut down its stores in University City, which is west of St. Louis. and in Kansas City. It later reopened them after the court gave them permission to continue operating pending an appeal. On December 5, the Missouri Court of Appeals for the Western District ruled that MADA had no legal standing to bring its lawsuit and dismissed its claim.
MADA argued to the appellate court that if its claim was dismissed, no system of checks and balances would be available to challenge decisions of the Department of Revenue. But the court was having none of it, reports the St. Louis Post-Dispatch. In a stinging rebuke, it said that MADA’s complaint was more like that of competitor seeking to avoid competition than one brought by someone seeking to defend the public interest.
Tesla, predictably, was jubilant. The company is still fighting dealer associations in multiple states and this was a rare victory for the company. “The decision today is a victory for Missouri consumers who want the choice to learn about and purchase their Tesla in their home state,” Tesla said in a statement. “We have been serving customers in Missouri for almost five years and have contributed to the state economy and jobs for Missourians — something that will now continue.”
Well, maybe. MADA is now licking its wounds and contemplating its next legal maneuver. Clearly it could ask the Missouri Supreme Court to review the decision of the court of appeals. “We believe that today’s Appeals Court decision does not hold the government accountable, but rather enables a system where the Department of Revenue can arbitrarily issue a license to anybody for any reason, without an appropriate and necessary mechanism for Missouri taxpayers to challenge those decisions,” MADA Executive Director Doug Smith said in a statement.
That doesn’t sound like the dealers are willing to accept defeat quietly. Tesla may have won a round, but the battle to sell directly to consumers is far from over. The debate has larger consequences for the automotive marketplace. Many new electric car companies are about to begin selling cars in the US. Most would like to avoid setting up expensive dealer networks if they can. What happens to Tesla will have ramifications for the entire US auto industry in the coming years. That is what scares car dealers more than anything.